Apple television not expected to 'break the bundle' from cable

With opposition from content providers likely, Apple's rumored television set will not be able to cut out existing cable operators, and Apple will instead be forced to work with them, a new analysis predicts.

J.P. Morgan does not believe that Apple's anticipated television will arrive this year, nor do its analysts believe the debut of such a device will cause a major shake-up in how video content is delivered. The investment bank's position on a possible Apple television was expanded on in a second research note issued Thursday from analyst Phil Cusick, who does not think Apple will be able to "break the bundle" and push out cable operators.

An attempt to cut out pay TV operators, by relying on over-the-air television broadcasts in addition to iTunes and services like Netflix and Hulu, would be the most aggressive move Apple could make, Cusick said. But he doesn't think it's likely Apple will go down that road.

"We believe that media content owners have no incentive to allow this scenario to materialize and will block it," Cusick wrote in a note to investors provided to AppleInsider.

The analyst sees two other possible scenarios that Apple could use going forward with its Apple TV set-top box and the possibility of a full-fledged television set. First, he said Apple could attempt to become the set-top box option for cable companies, bringing together the broadcast content that customers already pay for with Web-based content like iTunes and Netflix.

"Apple would differentiate by adding a really nice guide to make the experience better, while the carrier could differentiate as the first (for some time, anyway) to have an Apple device," Cusick wrote.

In the other scenario offered, Cusick thinks it's most likely that Apple will slowly expand its current Apple TV "hobby," rather than attempt to make it a full-featured set-top box like TiVo.

J.P. Morgan has advised investors that if Apple does make a television set, such a device is unlikely to arrive before 2014 at the earliest. But analyst Mark Moskowitz added that Apple's preference for double-digit operating margins on hardware could pose a problem in the cutthroat HDTV business, where margins are razor-thin.

Moskowitz said that if Apple did release its own television set, the company would differentiate its product through its attention to design, as well as picture quality that would be first-in-class.

Apple became widely believed to be working on its own full-fledged television set after company co-founder Steve Jobs told biographer Walter Isaacson that he felt he had "cracked" the secret to a simple and elegant television set. "It will have the simplest user interface you could imagine," he said. "I finally cracked it."

Moskowitz said that if Apple did release its own television set, the company would differentiate its product through its attention to design, as well as picture quality that would be first-in-class.

Apple customers don't care about picture quality. Picture and sound quality have never been big sellers.

Its the UX, Stupid. The UX.

And if anybody has cracked the UX it is Apple.

I don't think that reliance on picture quality could possibly make up for the headache induced by most people's current setups. Mom can't figure out the dozen buttons that you need to push to get the sound of a DVD to actually come out of the Home Theater System. Nobody knows which remote control to use to adjust the volume.

This all sounds exactly analogous to all the arguments as to why Apple could never succeed in the mobile phone market and we all know how that turned out. This type of analysis bodes very well for the success of an iPanel IMO.

This all sounds exactly analogous to all the arguments as to why Apple could never succeed in the mobile phone market and we all know how that turned out. This type of analysis bodes very well for the success of an iPanel IMO.

Actually the arguments were correct, Apple made a bad phone, it was highly prone to dropping calls. Being a handheld computer is what got it going and something that SJ himself couldn't even see which is apps that propelled it where it is today. Here's the difference, while I own one phone, I own 4 TV sets, all of which have a cable box attached to. I never use the TVs UI but the cable box's. Unless Apple makes set top boxes or Cable Card TVs I can't see how a Apple can do well. As far as programming goes with Netflix, HULU, and on demand I'm good.